Glass-Steagall repealed
The Gramm-Leach-Bliley Act repealed the 1933 Glass-Steagall separation of commercial and investment banking. Citicorp had already merged with Travelers (which owned Salomon Smith Barney) the year before in anticipation. Banks could now lend, trade, underwrite, and sell insurance — all on the same balance sheet.
The repeal was bipartisan. Clinton signed it. Robert Rubin, a Treasury Secretary who had championed it, later joined Citigroup as a senior advisor. The line from 1999 to 2008 is not a coincidence: the banks that failed or required rescue in 2008 were in structural configurations that had been illegal for 66 years.
05 · The Deregulation Era
The late 1990s and early 2000s saw the most dramatic loosening of financial regulation since the 1920s. Glass-Steagall was repealed. OTC derivatives were explicitly exempted from CFTC oversight. When Enron and WorldCom showed what the new environment produced, Congress responded with Sarbanes-Oxley — but only on corporate accounting, not on the structural changes that had already happened inside the banks themselves.
Read the full era →